The Performance of Private Equity Funds

Oliver Gottschalg () and Ludovic Phalippou
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Oliver Gottschalg: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique

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Abstract: The performance of private equity funds as reported by industry associations and previous research is overstated. A large part of performance is driven by inflated accounting valuation of ongoing investments and we find a bias toward better performing funds in the data. We find an average net-of-fees fund performance of 3% per year below that of the S&P 500. Adjusting for risk brings the underperformance to 6% per year. We estimate fees to be 6% per year. We discuss several misleading aspects of performance reporting and some side benefits as a first step toward an explanation.

Keywords: Performance; Private equity (search for similar items in EconPapers)
Date: 2009-03
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Citations: View citations in EconPapers (139)

Published in Review of Financial Studies, 2009, Vol. 22, n° 4, pp. 1747-1776. ⟨10.1093/rfs/hhn014⟩

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Related works:
Journal Article: The Performance of Private Equity Funds (2009)
Working Paper: The Performance of Private Equity Funds (2009)
Working Paper: The performance of private equity funds (2006)
Working Paper: The Performance of Private Equity Funds (2006)
Working Paper: The Performance of Private Equity Funds (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00458111

DOI: 10.1093/rfs/hhn014

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